Question 1

-The figure above shows the market for annual influenza immunisations in Australia. Area A is the

Accepted Answer

A)  remaining deadweight loss when there is the illustrated subsidy. 
B)  gain in efficiency from the illustrated subsidy. 
C)  consumer surplus with the illustrated subsidy. 
D)  loss in efficiency from the illustrated subsidy. 
E)  total deadweight loss when there is not the illustrated subsidy. 
A)  remaining deadweight loss when there is the illustrated subsidy. 
B)  gain in efficiency from the illustrated subsidy. 
C)  consumer surplus with the illustrated subsidy. 
D)  loss in efficiency from the illustrated subsidy. 
E)  total deadweight loss when there is not the illustrated subsidy. B

Question 2

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service is the marginal

Accepted Answer

A)  private cost. 
B)  public cost. 
C)  external cost. 
D)  social cost. 
E)  None of the above answers is correct. 
A)  private cost. 
B)  public cost. 
C)  external cost. 
D)  social cost. 
E)  None of the above answers is correct. A

Question 3

Which of the following is a method used by government to cope with the situation in which production of a good creates an external benefit?

Accepted Answer

A)  Subsidising production 
B)  Imposing Coasian taxes 
C)  Running a lottery 
D)  Marketable permits 
E)  Removing property rights 
A)  Subsidising production 
B)  Imposing Coasian taxes 
C)  Running a lottery 
D)  Marketable permits 
E)  Removing property rights A

Question 4

If the marginal private cost of producing one kilowatt of power in South Australia is ten cents and the marginal social cost of each kilowatt is fourteen cents, then the marginal external cost equals ________ per kilowatt.

Accepted Answer

A)  ten cents 
B)  nineteen cents 
C)  fourteen cents 
D)  four cents 
E)  zero cents 
A)  ten cents 
B)  nineteen cents 
C)  fourteen cents 
D)  four cents 
E)  zero cents

Question 5

-The figure above shows the market for education, a good possessing an external benefit. In order to attain the efficient number of students, a government subsidy must equal ________ per student.

Accepted Answer

A)  $10,000 
B)  $6,000 
C)  $2,000 
D)  $16,000 
E)  $8,000 
A)  $10,000 
B)  $6,000 
C)  $2,000 
D)  $16,000 
E)  $8,000

Question 6

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The marginal cost borne by producers when 200 billion kilowatt hours are produced is

Accepted Answer

A)  5 cents per kilowatt hour. 
B)  10 cents per kilowatt hour. 
C)  20 cents per kilowatt hour. 
D)  15 cents per kilowatt hour. 
E)  0 cents per kilowatt hour. 
A)  5 cents per kilowatt hour. 
B)  10 cents per kilowatt hour. 
C)  20 cents per kilowatt hour. 
D)  15 cents per kilowatt hour. 
E)  0 cents per kilowatt hour.

Question 7

Transactions costs are the

Accepted Answer

A)  external costs when a firm pollutes. 
B)  reason why taxes cannot affect the inefficiency resulting from an external cost. 
C)  costs of using the Coase theorem. 
D)  external marginal costs of the externality. 
E)  opportunity costs of conducting a transaction. 
A)  external costs when a firm pollutes. 
B)  reason why taxes cannot affect the inefficiency resulting from an external cost. 
C)  costs of using the Coase theorem. 
D)  external marginal costs of the externality. 
E)  opportunity costs of conducting a transaction.

Question 8

Legally established titles to ownership, use and disposal of factors of production and goods and services are called ________ rights.

Accepted Answer

A)  government 
B)  property 
C)  pollution 
D)  inefficient 
E)  private 
A)  government 
B)  property 
C)  pollution 
D)  inefficient 
E)  private

Question 9

If producing a good or a service creates pollution, then

Accepted Answer

A)  the industry's supply curve includes the extra cost of pollution. 
B)  at the unregulated, competitive market equilibrium quantity, marginal social benefit is less than the equilibrium price. 
C)  at the unregulated, competitive market equilibrium quantity, marginal social benefit and marginal social cost are equal. 
D)  at the unregulated, competitive market equilibrium quantity, marginal social cost is greater than the equilibrium price. 
E)  an unregulated competitive market produces an efficient output. 
A)  the industry's supply curve includes the extra cost of pollution. 
B)  at the unregulated, competitive market equilibrium quantity, marginal social benefit is less than the equilibrium price. 
C)  at the unregulated, competitive market equilibrium quantity, marginal social benefit and marginal social cost are equal. 
D)  at the unregulated, competitive market equilibrium quantity, marginal social cost is greater than the equilibrium price. 
E)  an unregulated competitive market produces an efficient output.

Question 10

-The figure above shows the costs and benefits associated with producing paper. What is the efficient level of output?

Accepted Answer

A)  More than 6 tonnes 
B)  6 tonnes 
C)  4 tonnes 
D)  0 
E)  None of the above answers is correct. 
A)  More than 6 tonnes 
B)  6 tonnes 
C)  4 tonnes 
D)  0 
E)  None of the above answers is correct.

Question 11

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service

Accepted Answer

A)  equals the cost borne by people other than the producer. 
B)  is the external cost. 
C)  is the marginal social cost. 
D)  is the marginal private cost. 
E)  always equals the benefit the consumer derives from that good or service. 
A)  equals the cost borne by people other than the producer. 
B)  is the external cost. 
C)  is the marginal social cost. 
D)  is the marginal private cost. 
E)  always equals the benefit the consumer derives from that good or service.

Question 12

The cost of producing an additional unit of a good or service that falls on people other than the producer is the marginal

Accepted Answer

A)  private cost. 
B)  social benefit. 
C)  external cost. 
D)  social cost. 
E)  None of the above answers is correct. 
A)  private cost. 
B)  social benefit. 
C)  external cost. 
D)  social cost. 
E)  None of the above answers is correct.

Question 13

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Geelong for each rock concert that is offered. It also illustrates the marginal private benefit. There is no external benefit. The efficient number of concerts in Geelong is

Accepted Answer

A)  5. 
B)  15. 
C)  10. 
D)  0. 
E)  20. 
A)  5. 
B)  15. 
C)  10. 
D)  0. 
E)  20.

Question 14

A subsidy is

Accepted Answer

A)  a payment that the government makes to private producers of goods and services. 
B)  a tax imposed on the producers of certain goods or services. 
C)  a voucher received by the government from producers of goods and services. 
D)  the revenue received from the government to produce a good or service by a public authority. 
E)  a tax imposed on the consumers of certain goods or services. 
A)  a payment that the government makes to private producers of goods and services. 
B)  a tax imposed on the producers of certain goods or services. 
C)  a voucher received by the government from producers of goods and services. 
D)  the revenue received from the government to produce a good or service by a public authority. 
E)  a tax imposed on the consumers of certain goods or services.

Question 15

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The marginal cost borne by producers when 100 billion kilowatt hours are produced is

Accepted Answer

A)  10 cents per kilowatt hour. 
B)  15 cents per kilowatt hour. 
C)  5 cents per kilowatt hour. 
D)  0 cents per kilowatt hour. 
E)  20 cents per kilowatt hour. 
A)  10 cents per kilowatt hour. 
B)  15 cents per kilowatt hour. 
C)  5 cents per kilowatt hour. 
D)  0 cents per kilowatt hour. 
E)  20 cents per kilowatt hour.

Question 16

-The figure above shows the market for a good with an external benefit. If the market is competitive and the government takes no action, the equilibrium quantity of ________ units is inefficient because ________.

Accepted Answer

A)  10; marginal social benefit exceeds marginal benefit 
B)  10; marginal cost exceeds marginal benefit 
C)  8; marginal benefit exceeds marginal cost 
D)  8; marginal cost exceeds marginal benefit 
E)  10; marginal external benefit exceeds marginal social benefit 
A)  10; marginal social benefit exceeds marginal benefit 
B)  10; marginal cost exceeds marginal benefit 
C)  8; marginal benefit exceeds marginal cost 
D)  8; marginal cost exceeds marginal benefit 
E)  10; marginal external benefit exceeds marginal social benefit

Question 17

If the marginal private benefit of attending college for Shelly is $40,000 and the marginal external benefit is $15,000, she will attend university if the cost of attendance is no more than

Accepted Answer

A)  $55,000. 
B)  $45,000. 
C)  $40,000. 
D)  $15,000. 
E)  $25,000. 
A)  $55,000. 
B)  $45,000. 
C)  $40,000. 
D)  $15,000. 
E)  $25,000.

Question 18

Which of the following equations is correct?

Accepted Answer

A)  MSC = MC ÷ marginal external cost 
B)  MSC = MC + marginal external cost 
C)  MC = marginal external cost - MSC 
D)  MC = MSC + marginal external cost 
E)  MSC = MC × marginal external cost 
A)  MSC = MC ÷ marginal external cost 
B)  MSC = MC + marginal external cost 
C)  MC = marginal external cost - MSC 
D)  MC = MSC + marginal external cost 
E)  MSC = MC × marginal external cost

Question 19

-The figure above shows the market for annual influenza immunisations in Australia. Area B is the

Accepted Answer

A)  loss in efficiency from the illustrated subsidy. 
B)  gain in efficiency from the illustrated subsidy. 
C)  remaining deadweight loss when there is the illustrated subsidy. 
D)  equilibrium with the illustrated subsidy. 
E)  deadweight loss when there is not the illustrated subsidy. 
A)  loss in efficiency from the illustrated subsidy. 
B)  gain in efficiency from the illustrated subsidy. 
C)  remaining deadweight loss when there is the illustrated subsidy. 
D)  equilibrium with the illustrated subsidy. 
E)  deadweight loss when there is not the illustrated subsidy.

Question 20

-In order for pollution taxes to be effective in eliminating the deadweight loss resulting from pollution, the pollution tax must be set equal to the

Accepted Answer

A)  price of the good. 
B)  marginal private cost. 
C)  marginal external cost. 
D)  marginal benefit of polluting. 
E)  marginal social cost. 
A)  price of the good. 
B)  marginal private cost. 
C)  marginal external cost. 
D)  marginal benefit of polluting. 
E)  marginal social cost.

-The figure above shows the market for annual influenza immunisations in Australia. Area A is the

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service is the marginal

Which of the following is a method used by government to cope with the situation in which production of a good creates an external benefit?

If the marginal private cost of producing one kilowatt of power in South Australia is ten cents and the marginal social cost of each kilowatt is fourteen cents, then the marginal external cost equals ________ per kilowatt.

-The figure above shows the market for education, a good possessing an external benefit. In order to attain the efficient number of students, a government subsidy must equal ________ per student.

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The marginal cost borne by producers when 200 billion kilowatt hours are produced is

Transactions costs are the

Legally established titles to ownership, use and disposal of factors of production and goods and services are called ________ rights.

If producing a good or a service creates pollution, then

-The figure above shows the costs and benefits associated with producing paper. What is the efficient level of output?

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service

The cost of producing an additional unit of a good or service that falls on people other than the producer is the marginal

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Geelong for each rock concert that is offered. It also illustrates the marginal private benefit. There is no external benefit. The efficient number of concerts in Geelong is

A subsidy is

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The marginal cost borne by producers when 100 billion kilowatt hours are produced is

-The figure above shows the market for a good with an external benefit. If the market is competitive and the government takes no action, the equilibrium quantity of units is inefficient because .

If the marginal private benefit of attending college for Shelly is $40,000 and the marginal external benefit is $15,000, she will attend university if the cost of attendance is no more than

Which of the following equations is correct?

-The figure above shows the market for annual influenza immunisations in Australia. Area B is the

-In order for pollution taxes to be effective in eliminating the deadweight loss resulting from pollution, the pollution tax must be set equal to the

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Public Goods and Common Resources

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 10: Externalities

-The figure above shows the market for annual influenza immunisations in Australia. Area A is the

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service is the marginal

Which of the following is a method used by government to cope with the situation in which production of a good creates an external benefit?

If the marginal private cost of producing one kilowatt of power in South Australia is ten cents and the marginal social cost of each kilowatt is fourteen cents, then the marginal external cost equals ________ per kilowatt.

-The figure above shows the market for education, a good possessing an external benefit. In order to attain the efficient number of students, a government subsidy must equal ________ per student.

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The marginal cost borne by producers when 200 billion kilowatt hours are produced is

Transactions costs are the

Legally established titles to ownership, use and disposal of factors of production and goods and services are called ________ rights.

If producing a good or a service creates pollution, then

-The figure above shows the costs and benefits associated with producing paper. What is the efficient level of output?

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service

The cost of producing an additional unit of a good or service that falls on people other than the producer is the marginal

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Geelong for each rock concert that is offered. It also illustrates the marginal private benefit. There is no external benefit. The efficient number of concerts in Geelong is

A subsidy is

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The marginal cost borne by producers when 100 billion kilowatt hours are produced is

-The figure above shows the market for a good with an external benefit. If the market is competitive and the government takes no action, the equilibrium quantity of ________ units is inefficient because ________.

If the marginal private benefit of attending college for Shelly is $40,000 and the marginal external benefit is $15,000, she will attend university if the cost of attendance is no more than

Which of the following equations is correct?

-The figure above shows the market for annual influenza immunisations in Australia. Area B is the

-In order for pollution taxes to be effective in eliminating the deadweight loss resulting from pollution, the pollution tax must be set equal to the

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Public Goods and Common Resources

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

-The figure above shows the market for a good with an external benefit. If the market is competitive and the government takes no action, the equilibrium quantity of units is inefficient because .